Biden faces health industry fight over new ‘surprise’ billing ban

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A lobbying onslaught from the health care industry nearly stopped Congress from passing a nationwide ban on “surprise” medical bills last year. Now, the same powerful groups are racing to sway federal agencies tasked with making the new law work — with billions of dollars and promised patient protections on the line.

Health groups and consumer advocates are mounting a lobbying campaign to shape forthcoming federal rules around the ban, which bars hospitals and doctors from sending unexpected, usually large bills to insured patients who unwittingly received out-of-network care. While the practice was widely condemned by Democrats and Republicans, health groups fought bitterly during the law’s drafting over who would pick up the costs they could no longer bill to patients.

The legislation, passed as part of the year-end spending deal and hailed as a critical consumer protection, charged the Biden administration with hammering out many of the complicated and politically fraught details of how to shield patients from the surprise bills. The outcome will provide an early sign of how aggressively the Biden administration will regulate an industry that’s readying battle against Democrats’ more ambitious health care reforms, including on drug pricing and lowering the Medicare age.

The groups that have begun lobbying the administration include large hospital systems and health insurers, major trade associations, air ambulance companies and private equity-backed physician staffing firms, including at least one that was connected to a successful dark-money effort that poured tens of millions of dollars into killing an earlier surprise billing fix opposed by health care providers.

Groups have already spent heavily on lobbying and are expected to soon intensify their efforts, putting patient advocates on high alert over whether the new protections could be watered down during the rulemaking process and leave consumers still vulnerable to unexpectedly large bills.

“[The Department of Health and Human Services] is going to have to be really hard-hitting, or it’s another squishy law that’s supposed to be preventive but is totally circumventable,” said one consumer advocate who spoke on condition of anonymity because they’re in contact with the administration on this issue.

Federal officials face a sprawling checklist of issues to resolve in the coming months, with the law’s first major deadline approaching in July. They must figure out how to ensure patients don’t unknowingly sign away their new protections, monitor and punish providers who violate the ban, and establish a process for settling disputes, among other complicated considerations. The ban is due to take effect in January.

“Parts of the bill are very vague. So depending on decisions made by [the administration], the surprise billing ban could be a blessing to patients — or it could be disastrously expensive," said James Gelfand, a lobbyist for the ERISA Industry Committee, which represents large employers.

Surprise bills typically come following emergency room visits, when patients might get shuttled to a hospital outside their coverage network or receive care from a specialist not in-network. Even for planned procedures like surgeries, patients might unexpectedly be attended to by an out-of-network specialist, such as an anesthesiologist.

An estimated one in five patients get hit with a surprise bill following an elective surgery, according to a JAMA study last year. And the practice adds more cost into the health system, driving up insurance premiums. Curbing surprise bills would save between $12 billion and $38 billion in premiums, found a study from the USC Schaeffer Center for Health Policy and Economics last fall.

What once appeared to be an easy fix to the problem turned into a two-year slog in the last Congress, after physician staffing groups — in some cases, backed by private equity interests — spent heavily attacking the initial bipartisan framework for ending surprise bills. Hospitals also fought the plan, which they argued favored insurers and hinted at price controls. To get a ban passed before the last Congress adjourned, lawmakers punted on settling many of the thorniest issues.

The final legislation is seen as friendlier to doctors and hospitals than earlier versions. Patients are essentially expected to pay their insurer’s network rate when they unexpectedly receive care from an out-of-network provider. Doctors and insurers are supposed to negotiate over the remaining charges, and any disputes they can’t resolve would be sent to a mediator.


But the Biden administration is left with the task of filling in many of the details, including how insurers should calculate the initial payment to out-of-network providers before both sides agree on a final cost. That will ultimately affect what patients must pay from their own pockets. Determining that rate, which will be pegged to local in-network costs, will be made harder by the fact that privately negotiated rates for health care services are often hidden. Doctors are already pushing for higher payments, while insurers and employers want to keep them low.

The federal government by the end of the year must also set up an “independent dispute resolution” process to handle complaints from providers who claim they’ve been low-balled by insurers. The challenge for HHS is designing a system that’s seen as fair but doesn’t become the go-to option for settling disputes, which policy experts and patient advocates agree will drive up costs.

There’s also concern about how patients can still receive large bills if they sign a consent form agreeing to receive care from an out-of-network specialist. Congress specifically banned this option for anesthesiologists, pathologists, radiologists and other specialists that are among the largest sources of surprise bills, but patient advocates worry about potential loopholes.

“The concept of consent brings the consumer back in, and that’s troubling,” said Patricia Kelmar, director of health care campaigns for the consumer advocacy group U.S. PIRG. “Consent is a jab in the wall that protects the consumer.”

HHS, which is handling the bulk of the administration’s work on the surprise billing ban, has been holding calls with industry groups since last month to collect feedback. In those calls, federal health officials have largely focused on technical details, rather than some dicier issues around payments and enforcing the ban, according to numerous sources who’ve participated.

A department spokesperson said it’s too early to “speculate on the final rulemaking process,” but said feedback from the calls will “offer solid footing for rulemaking built on best practices, transparency and the needs of all Americans.”

The American College of Emergency Physicians is focused on ensuring that HHS establishes a balanced arbitration system for settling payment disputes, a spokesperson for the group said.

"Congress in the legislative text set out that all the arbitration factors should be all weighed equally,” said spokesperson Laura Wooster. “On the regulatory side, we want to make sure that’s preserved. If it’s not explicitly laid out in the regulation, it’s easier down the road over time to become a little lopsided [for insurers]."

Meanwhile, health insurers want to make sure that regulations prevent “bad actors” from gaming that system, said a spokesperson for a top trade group.

“Solutions that will both protect patients and lower health care costs include regulations that prohibit abuse of the independent dispute resolution process, provide clear guidance about what services qualify under the law, and ensure that payments reflect market conditions and rates,” said Kristine Grow of America’s Health Insurance Plans.

Regulatory deadlines are approaching fast while some key positions in HHS still haven’t been filled by political appointees, who would have to make some of the toughest decisions around implementing the new law.

Health insurance experts, like Georgetown University professor Jack Hoadley, said the administration is facing a tight timeline to put the surprise billing ban in place.

“We put a lot of responsibility on the federal agencies for a law that’s due to take effect in January, and the clock is ticking,” Hoadley said.

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